Despite immediate delay, Hochul's climate law change would weaken state's aggressive approach

ALBANY, N.Y. — New York’s top energy officials say the state can keep its leadership position on climate while weakening the state’s landmark law mandating reductions in planet-warming emissions.

But the numbers — and previous work by state staff — show that New York would be required to take less aggressive action to slash greenhouse gasses if Gov. Kathy Hochul, despite dropping an immediate push for it Wednesday, ultimately cuts a deal with lawmakers to change the climate law, an effort first reported by POLITICO.

“Overall, you’re saying we don’t need to reduce emissions as much,” said Bob Howarth, a Cornell University professor and member of the Climate Action Council that was set up to chart a path to achieving the state’s climate goals. “This is a big retrenchment from the climate goal, particularly on the use of natural gas.”

Hochul has backed down from the controversial proposal to rewrite New York’s climate law in the budget talks after backlash from environmental groups and some Democratic lawmakers. The priority, for now, is a rebate as part of “cap and invest.”

But Department of Environmental Conservation Commissioner Basil Seggos said on Wednesday the issue of how New York counts emissions still needs to be considered.

“The more difficult potential changes to the law that have been contemplated may take more time,” he said in an interview Wednesday with POLITICO.

Nation leading standards

New York’s law was the most ambitious statutory mandate requiring emissions reductions when it passed in 2019. It required emissions to be slashed 40 percent from 1990 levels by 2030 and 85 percent by 2050, with the remainder offset. It also requires zero-emissions electricity by 2040.

New York is the one of only two jurisdictions to use a 20-year time horizon to account for the damaging effects of planet-warming gasses instead of 100 years.

It makes methane, the main component of natural gas, more potent than under the longer accounting timeline. Backers say the shorter measure more accurately reflects the short-term warming impact of greenhouse gasses and the urgency around reducing emissions.

The latest U.N. Intergovernmental Panel on Climate Change report warned global action is not happening quickly enough to avert some of the most damaging potential effects of a warming planet.

New York is unique in using three factors that increase the emissions that have to be reduced: the 20-year metric, out-of-state upstream emissions from imported fuels and “biogenic” emissions from burning fuels like wood and ethanol.

If New York were to use the accounting most other states do, its statutory targets would fall behind at least Washington and Massachusetts — and particularly Maryland, the only other state to use the 20-year timeline for emission reductions.

The Hochul administration said the numerical reductions of greenhouse gas emissions required between the two accounting methods by 2030 could not be compared.

But the percentage progress toward the goal under the two scenarios indicates New York would be able to keep burning more fossil fuels for longer. Under the state’s current accounting, for example, New York has achieved about 37 percent of the progress needed to meet the 2030 goal, according to an analysis of state data by POLITICO.

If the state were to switch over to the accounting method being pushed by Hochul’s administration, the picture is much rosier: the state has already gotten three-quarters of the way to the 2030 goal.

The same is true for progress toward the 2050 limit, which is an 85 percent reduction from 1990 levels with the remainder offset: 17 percent toward the target under New York’s law and 34 percent if it is changed.

Affordability concerns

But New York’s unique accounting also makes the state’s mandated reductions more costly for consumers who would face increased costs at the pump and on their heating bill. That’s under a cap-and-trade system that Hochul’s administration is developing to achieve the goals, raise revenues for investments and send rebates to consumers.

“A lot of folks are watching us, obviously, as leaders and we intend to remain as leaders. We recognize the best way to get from here to there, though, is to advance programs that further affordability for New York and, by the way, put New York in a position where we are not disadvantaged by virtue of our accounting,” Doreen Harris, the CEO of NYSERDA, said in an interview Tuesday.

Harris said it wasn't just about methane but also the upstream emissions impact. That factor added about 110 million megatons of carbon dioxide equivalents to the state’s 2019 greenhouse gas inventory while the timeframe shift added 65 million megatons, according to a 2021 Climate Action Council presentation.

An analysis by NYSERDA, which Harris said on Tuesday would be publicly posted soon but a spokesperson on Thursday said would be revisited after the budget is passed, showed that a gallon of gas would cost 63 cents more under New York’s method versus 39 cents more under a more widely used international standard. That’s a 61 percent premium.

The calculation, according to figures pointed to out the governor’s office, is based on the allowance price set in the state of Washington’s recent auction.

The premium for natural gas utility bills would be greater because of the way the 20-year metric weighs methane as a more climate-damaging gas in the near term: nearly an 80 percent higher increase under New York’s accounting, with an increase of about $600 annually for the average residential gas customer.

Gas utilities benefit

While some of the state’s utilities including National Grid have previously supported shifting to the 100-year timeframe, a greater focus has been on how fuels such as renewable natural gas — methane produced from animal manure, landfills or wastewater — are treated by the state.

Because the climate law sets a total emissions limit, not a net one, the state is counting biofuels, including RNG, differently than most other jurisdictions. In other places, they’re considered carbon neutral or even carbon negative. Under the state’s accounting, RNG is treated essentially the same as conventional natural gas, except that it avoids the upstream emissions associated with production and transport into the state.

The difference drives only a small portion of the increase of New York’s emissions accounting: just 10 million megatons in 2019. But it limits the use of such fuels in the coming years, weakening the argument by gas utilities that their infrastructure should largely be kept online and used to deliver lower-carbon fuels to customers.

The state’s utilities have advocated for New York to change the way it counts RNG. National Fuel Gas has explicitly called for the law to be changed. Clean Fuels Alliance America, which represents producers of biofuels, has argued the state could interpret the law differently.

“We think that was an oversight, or at least misplaced,” said Phil DeCicco, deputy general counsel for National Grid in a July 2022 discussion. “Obviously we think RNG has benefits in terms of captured methane.”

DeCicco said Grid was not concerned about the 20-year time frame, which made their proposal more attractive.

One reason gas utilities actually might be happier with a 20-year accounting framework is that it increases the benefits of replacing leak-prone pipes with newer gas infrastructure. Those are relatively straightforward capital projects that utilities earn a return from ratepayers on.

Harris confirmed the Hochul administration’s proposal does include addressing emissions from biofuels. “Certainly the accounting framework for bioenergy is part of the differences we are considering,” she said.

Sounding the alarm

When Hochul began pushing the accounting changes quietly in the state budget, Sen. Kevin Parker (D-Brooklyn) also introduced a measure to make major changes, including on biofuels.

Environmental advocates are concerned the bill could open the floodgates to imported renewable natural gas. Dale Bryk, a former Cuomo administration official involved in negotiation on the 2019 law and a senior fellow at the Regional Plan Association, called the move a “nefarious” effort by National Grid and National Fuel Gas.

National Grid has not taken a position on Parker’s bill, according to a spokesperson. A spokesperson for National Fuel Gas did not respond to a request for comment.

Concerns about combusting RNG and other lower-carbon fuels causing pollution in low-income and disadvantaged communities were part of the discussion of the climate law, Bryk confirmed.

“If you're still combusting fuels in buildings, then there's still an impact at the combustion place,” she said. “The benefit side of the equation is happening out of state, so we're just losing that, and then the impact is happening in state and we're allowing more of that.”

Weakening the need for action

If the change was approved, critics warn, that there would be less of a need to aggressively reduce the combustion of natural gas through increasing energy efficiency and electrifying buildings. Policies to remove diesel and gas vehicles from the roads could also become less urgent.

“Increases in methane would lead to increases in co-pollutants,” said Eunice Ko, deputy director of New York City Environmental Justice Alliance. The purported focus of the Hochul administration on disadvantaged communities “seem shallow if from the start we’re not accurately accounting for that and therefore obfuscating the harm and any benefits we want to claim, which will be distorted because of the accounting.”

Harris disputed that there would be any material impact on co-pollutant emissions. She said the policies laid out in the climate plan, despite relying on different analyses, would largely remain the same.

“There’s still, irrespective of the accounting, an extraordinary focus on electrification,” Harris said. “We would still be looking at significant levels of electrification and buildings and transportation, We'd still be talking about the significant expansion of our grid.”

What’s changed

Advocates and members of the Climate Action Council, who devoted hundreds of hours to helping to shape the state’s plan to reduce emissions in line with the state’s law, questioned what’s happened since December when the plan was finalized.

Large energy users, members of the council and external groups pushed for a cost analysis of the state’s emissions goals, asking for a quantitative analysis as part of the council's process. State leaders said the analysis would be done as policies under the plan were rolled out.

“I felt virtually ignored on the request,” said Gavin Donohue, president and CEO of the Independent Power Producers of New York, which represent power plants that include fossil fuel generators, a Climate Action Council member.

Hochul has also indicated a desire to link New York’s carbon emissions market with other states, which would be difficult to do without changing the accounting differences. Hochul requested an affordability analysis of “cap and invest” comparing New York’s climate accounting and more widely used international standards by state staff in her February budget proposal.

There would be a differential with any price on emissions because of New York’s unique accounting for fuels, which was finalized in August last year. But the higher than expected price in the Washington auction inflated the differential.

“Our leadership position remains firm, and certainly the governor's commitment to realizing our goals, but ultimately, it allows us to align with peer states and nations and that is extraordinarily valuable from an implementation perspective,” Harris said.